Tusk's plan to keep Britain in EU draws mixed response

British Prime Minister David Cameron (R) speaks with European Council President Donald Tusk at Downing Street in London, Britain, January 31, 2016.Toby Melville

CHIPPENHAM, England/BRUSSELS (Reuters) - European Council President Donald Tusk set out a plan on Tuesday for keeping Britain in the European Union to a mixed reception which underlined the challenges Prime Minister David Cameron faces convincing Britons they should stay in the bloc.

Cameron mounted a strong defense of membership of the 28-nation bloc after Tusk released details of his plan following weekend talks, saying he would be ready to campaign to stay in the EU if the proposals won the backing of other EU countries.

If the terms worked out with Tusk are accepted and some improvements are made, Cameron added, they will offer the "best of both worlds" for Britain. Cameron has promised a referendum which could happen as early as June.

But with Euroskeptics branding the talks "trivial" and some of Cameron's allies questioning whether the package of measures will be enough, a summit of EU leaders that is due to discuss the proposals on Feb. 18-19 looks likely to be difficult.

"Sometimes people say to me if you weren't in the European Union would you opt to join the European Union," Cameron told reporters and workers at a manufacturing plant in Chippenham, southwest England.

"Today I would give a very clear answer: If I could get these terms for British membership I sure would opt in to be a member of the European Union because these are good terms and they are different to what other countries have."

Tusk's draft text addresses all four areas where Cameron has demanded reform and officials claimed victory in winning concessions to stem migration and to boost British sovereignty.

Cameron rejected criticism that he had watered down his demands, saying improvements to the deal could be made. "This is not a done deal yet, there is a lot more work to be done over these next couple of weeks," he said.

Despite the prospect of further brinkmanship until the summit, financial markets and some business leaders took heart that a deal now appeared more likely, easing some uncertainty.

Sterling jumped by almost half a U.S. cent to $1.4425 after the outline of the proposed deal was released.

"The deal on the table is better than we expected," said Simon Walker, director general of the Institute of Directors, a business organization.

"GOOD DEAL"

Cameron has spent months trying to get a deal so he can campaign to stay in a reformed EU at the referendum he promised in 2013 to try to put to rest the divisive subject of Europe that has dogged his Conservative Party for decades.

The stakes are high. The referendum will not only determine Britain's future role in world trade and affairs, but also shape the EU, which has struggled to maintain unity over migration and financial crises, by ripping away its second-largest economy and one of its two main military powers.

Officials were keen to show Cameron had won agreement with Tusk on two important areas of the renegotiation - on stopping EU legislation it opposes and on curbing migrants' benefits.

The text envisages a legally binding provision allowing a group of 55 percent or more member states to stop EU legislation or demand changes, a measure Britain has sought to address voters' concerns that it has handed too much power to Brussels.

It also includes a clause saying Britain could suspend some payments to migrants from the rest of the bloc for four years, starting immediately after the referendum, after meeting the conditions to trigger a so-called 'emergency brake'.

Britain would also be excluded from the EU goal of "ever closer union" and be safeguarded against moves by the 19 countries that share the euro currency to impose rules by majority vote on London.

But there were gaps in the proposals, for example on how long Britain could suspend migrant benefits for and how Britain could push back against decisions made by euro zone members.

"I do think that the prime minister has been negotiating very hard and obviously very successfully but my view would be 'not enough' and we need to go further," London Mayor Boris Johnson, a possible successor to Cameron, told Sky News.

CHARADE

Some Euroskeptics say the difficulties in clinching a deal at the summit are being played up to make an eventual agreement seem like a triumph - something British officials have denied.

"What the government is asking for from the EU is trivial. These proposals will not take back control from the EU," said Matthew Elliott, chief executive of Vote Leave, which is lobbying for Britain to exit the EU.

Britain's pro-EU campaign welcomed the Tusk proposals, saying "with the changes set out today, Britain would be even stronger in Europe," said Stuart Rose, chair of Stronger In.

The British media, like the public, were split over the deal, but perhaps most telling were the words of Britain's most powerful media owner, Rupert Murdoch, on Twitter: "UK-EU negotiations meaningless without complete control of borders."

(This version of the story corrects first name in paragraph 11 to Simon, not Stuart)

Elizabeth Piper reported from London, additional reporting by Jan Strupczewski in Brussels, Guy Faulconbridge in Rome, Michael Holden and Kylie MacLellan in London, Gabriela Baczynska in Brussels and William James in Chippenham, Paul Carrel in Berlin and Jussi Rosendahl in Helsinki; Writing by Elizabeth Piper; Editing by Mark John and Gareth Jones